23 August 2002

Co-operative praises sung by new group

PLANS to encourage farmers to set up more co-operative ventures will be unveiled shortly by the English Collaborative Board steering group.

The board, which was one of the key recommendations of the Curry report on the future of farming, aims to demonstrate to farmers the benefits to be gained from successful collaboration. But it came too late to help Amelca, which called in the receivers after haemorraging almost £2m in operating losses.

Steve Ellwood, chairman of the collaboration board steering group, declined to comment on the contents of his report ahead of its publication. But he was willing to be quoted on the collapse of Amelca so long as it was in his capacity as head of agriculture at HSBC Bank.

"At the economic level, collaboration spreads the risk, but it doesnt reduce it. Farmers are learning lessons the hard way. Collaboration does not make a business plan easier to achieve. You still need to be hard-headed and make sure you collaborate with other producers for business reasons – not because it is fashionable.

Carrying risk

"Most business decisions carry a risk and that risk seems to be ever-increasing. Producers have two broad alternatives when faced with falling farm incomes. They can either generate additional income from non-food producing activities or they can try to maintain their profitability and capacity by farming.

"Producers must face up to the harsh reality that the number of buyers of food products is declining, the number of overall players in the agricultural market is falling and there is increased competition from overseas. Niche outlets can be risky and are not for everyone. But few farmers are big enough to compete on the world market.

"The remaining option is to become a favoured supplier to a processor. This requires skill, investment in reducing costs and sometimes added value. Only a very small number of businesses are big enough to do this, so the rest must come together as a co-operative or a joint venture." &#42